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  • Welcome
  • 🪙DUCAT
    • The Ducat Protocol
  • 🔳Unit
    • Philosophy
  • 💠How DUCAT works
    • Overview
    • Architecture
    • Vaults
      • Open Vault
      • Deposit BTC
      • Borrow UNIT
      • Repaying UNIT
      • Withdraw BTC
    • Canonical Reference Satoshis
    • Multi-Party Computation (MPC) Network
    • Indexer
    • Oracles
      • How It works
      • Price Quotes
      • Generating Keys and Signatures
  • 📊Liquidations
    • Basic Mechanics
    • Profit settlement
      • Example
  • 🤝Trust Assumptions
    • Overview
    • Asset management
    • Liquidations
    • Supply Control
  • 📩Governance
    • Governance
    • Risk Management
  • ⚠️Disclaimer
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  1. Governance

Governance

Ducat’s governance will be controlled by holders of the DUCAT tokens. The economic security of the Ducat network depends on a number of parameters which are up to users to manage through governance proposals. These parameters are:

  1. Liquidation threshold [135%] - the collateralisation threshold at which a borrower’s BTC vault is liquidated.

  2. Minimum Reserve Threshold Allocation [5.000sats] - the minimum quantum of sats for a transaction.

  3. Repossession tax rate [15%] - the tax rate levied on liquidated vaults.

  4. Subsidy rate [0.6%] - the rate at which the liquidation subsidy grows per 1% lower collateralisation level in a liquidated vault.

  5. Subsidy threshold [124%] - the vault collateralisation threshold at which the Protocol begins to subsidize the liquidation process.

  6. Vault minimum balance [10.000 sats] - the minimum amount of sats to instantiate a vault.

  7. Minimum borrow collateralisation threshold [160%] - the minimum collateralization level required to mint UNIT from a vault.

  8. Reserve accrual rate [50%] - the percentage of protocol profits which accrue to the Reserve, as opposed to DUCAT tokenholders.

  9. Treasury Target Size [10 BTC] - Target size of the BTC reserve used to insure against failed liquidation auctions, periodically clear stranded vaults, and create protocol-owned UNIT liquidity. All earnings above the level required to top up the Reserve will be at the discretion of DUCAT tokenholders.

All Governance parameters are required to operate the protocol. As such, they have an initial value determined by the Ducat Foundation. These values, however, can be amended via a governance vote at any time. All earnings above the level required to top up the Reserve will be at the discretion of DUCAT tokenholders.

Carrying out Governance proposals in BTC is logistically challenging, due to BTC’s current reliance on simple m-of-n multisigs. Ducat leverages a combination of the validation layer and Rune token-counting on a given token proposal to determine what the canonical contract location is, as determined by DUCAT tokenholder governance.

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Last updated 3 months ago

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